Emission Allowance

The Environment Quality Act (Quebec) provides for the issuance (pursuant to a cap and trade system) by the Quebec Minister of “offset credits” representing greenhouse gas (GHG) emission removals and reductions (measured in metric tonnes of CO₂ equivalents) generated from verified projects, as well as “early reduction credits” (e.g., for voluntary reductions) and “emission units” (issued out of the Minister’s reserve account). Such “emission allowances” may be used by a GHG emitter to “cover” its GHG emissions, or traded to another emitter or another “participant” (e.g., an exchange) for use to cover purchasers’ emissions.

CRA ruled that the emission allowances issued by the Minister satisfied the “emission allowance” definition in s. 123(1), so that subsequent supplies constituted supplies of emission allowances for Part IX purposes.